ESTIMATING THE COSTS AND BENEFITS OF THE CLOSURE OF A LOCAL GROCERY STORE

Grocery stores, especially local stores in rural areas, are decreasing in number. The closure of a local grocery store may be caused by a market failure due to consumers ’ inability to coordinate their behaviour. This study develops a questionnaire method to estimate the costs and benefi ts caused by the closure of a local grocery store. We explain why the closure of local grocery stores is a social dilemma for consumers, and we outline the costs and benefi ts of such closures identifi ed in previous research. To quantify and evaluate the effects of local closures, we asked all households living in the market area of two recently closed local grocery stores detailed questions about their purchases of groceries before and after the closure of the local store. We also estimated their average willingness to pay to have access to a local grocery store. We present here a cost–benefi t analysis for the two studied cases and discuss the ways to sustain local grocery stores